In this article, we delve into 12 monthly dividend stocks with over a 5% yield. Dividend stocks have long been a key component in shaping overall returns, with dividends accounting for an average of 34% of the total return of the S&P 500 from 1940 to 2023. This has attracted the attention of long-term investors, especially with the addition of strong tech companies to the dividend club in recent years.
According to Howard Silverblatt, Senior Index Analyst at S&P Dow Jones Indices, there has been a noticeable shift in investor views towards dividends, with large-caps like Meta Platforms, Salesforce, and Booking Holdings initiating multi-billion dividends. This change reflects a shift in investor sentiment towards dividends compared to previous years.
Dividend stocks not only contribute to market returns but also outperform inflation rates while showing less volatility compared to non-dividend stocks. Data from Wisdom Tree shows that dividends have grown by an annual average rate of 5.7% between 1957 and 2022, outpacing inflation rates by over 2%. Similarly, from 1990 to 2022, dividends in the S&P 500 grew by 5.61%, compared to an inflation rate of 2.64%.
High-yield dividend stocks have historically shown strong returns, contrary to common belief. Stocks with high dividend yields outperformed the broader market during high inflationary periods from 1940 to 2021, as per data from Newton Investment Management. These high-yield dividend stocks also outperformed low or zero-dividend-yield stocks in value-weighted performance.
Some of the best dividend stocks with high yields include Altria Group, Inc., Verizon Communications Inc., and British American Tobacco p.l.c. However, there are also companies with monthly payouts and yields above 5% that are worth considering. These include Realty Income Corporation, Main Street Capital Corporation, Apple Hospitality REIT, Inc., LTC Properties, Inc., Gladstone Commercial Corporation, EPR Properties, and PennantPark Floating Rate Capital Ltd.
These companies offer stable dividends despite their high yields and have a history of consistently paying dividends to shareholders. Hedge fund sentiment data for these stocks, as per Insider Monkey’s database, reveals the confidence of hedge funds in these companies. Overall, dividend stocks with over a 5% yield present an attractive investment opportunity for income-seeking investors.